My story last week about Zillow Inc.’s latest negative equity report — which found that 45 percent of homeowners in Maricopa and Pinal counties were underwater in the third quarter — apparently pushed some people’s buttons.

I’ve come to expect this kind of reaction whenever I write about a less-than-encouraging housing report, but when I get enough calls and emails, which was the case this time, it’s my cue to do more digging.

So I reached out to Zillow this week for a more thorough explanation on its methodologies and I’d like to share some key points from that conversation that may be of interest to all those skeptics out there:•As stated in last week’s story, negative equity, or also referred to as underwater, is when a homeowner owes more on their mortgage than what their home is worth. Zillow calculates the negative equity rate as the percentage of all mortgaged homes, rather than all existing homes, in an area that are underwater.

•When speaking of “homeowners” or “homes,” Zillow is referring to all single-family units, condominiums and townhomes that are occupied only by the owner.

•The number of mortgaged homes is provided by TransUnion, which has a contract with Zillow. Svenja Gudell, Zillow’s senior economist, told me that while TransUnion’s data is reliable, it still is only a sample of the market; for metro Phoenix, that sampling is very high, she said, but Zillow must therefore scale the data so it represents 100 percent of the market.

•There are slightly more than 775,000 owner-occupied homes with an outstanding mortgage in Maricopa and Pinal counties, according to Zillow. That means about 23 percent of all housing units in those areas are owned outright; we know this because the 2010 US Census, which Zillow used to come up with that 23-percent figure, says there are slightly more than 1 million owner-occupied housing units, with and without mortgages, in Maricopa and Pinal counties. Gudell said Phoenix is right around the national average for homes owned outright and she “wouldn’t be surprised if currently that was a little bit higher with all the investors buying homes with cash.”

•Home values, the second component for determining negative equity, are derived from Zillow’s own methodology. Gudell said that Zillow’s home-value estimates are determined by similar factors that appraisers use in the home-buying process and are based on three components:

1. Characteristics of the home and property, such as the number of bedrooms and bathrooms, square footage, location, lot size, etc., all of which are derived from public records in county recorder’s offices;

2. Data from county assessor’s offices, such as the appraised value and property taxes;

3. Sale prices of other homes in the surrounding area/neighborhood. Zillow’s home-value estimations have been the biggest sticking point for critics, such as Michael Orr, a real estate expert at Arizona State University’s W.P. Carey School of Business.

“The calculation is based on their estimates, which is their opinion on what a home is worth,” and they’re wrong, if not way-off, more often than not, Orr told me this week.

Zillow, on the other hand, firmly stands behind its methodology. But the research firm also is open about the fact that the methods are not perfect.

In fact, Zillow posts and consistently updates the accuracy levels for every state, county and metro area on its website. Here’s a link for that data in every Arizona county where you’ll notice a 10.8 percent median margin of error for Maricopa County and 13.5 percent for Pinal County as of Nov. 7, the last time Zillow updated the data.

This, of course, means that metro Phoenix’s negative equity rate could have been much higher, or lower, than 45 percent in the third quarter. Regardless, there are some housing experts who believe the discussion, and concern, around negative equity is simply unnecessary hype.

Gudell, on the other hand, disagreed.

“Negative equity is an extremely important thing to talk about, especially in Phoenix because it’s what’s driving the home values there,” Gudell said.

She said that while negative equity is not an indicator of imminent foreclosure or short sale, it does have a ripple effect on the housing market.

A high rate of underwater homes means many homeowners are holding-off on selling until values rise back to normal levels, she said. That’s one of the reasons why Phoenix has been experiencing record-low inventory this year, she said, which has subsequently triggered the recent surge in home values.